Estimation of Optimal International Reserves for Costa Rica: A Micro-Founded Approach (EN)
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Date
2012
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Journal Title
Journal ISSN
Volume Title
Publisher
Banco Central de Costa Rica
Abstract
In this paper we apply to the economy of Costa Rica a model for the estimation of the optimal amount of international reserves, developed by Jeanne and Rancière (2006, 2011). The main assumption of the model is that the consumers have the possibility to save a part of their income during normal times to smooth the decrease of consumption possibilities during periods of sudden stop crises. The two most important results are that for all analyzed periods the optimal level of reserves lies above the observed one and that the estimations of optimal reserves show relatively little volatility over time. Accordingly, the core conclusion of the document is that the Central Bank of Costa Rica should increase its efforts to accumulate international reserves in the medium run.
Description
Códigos JEL
F32- Ajustes de la balanza por cuenta corriente; Movimientos de capital a corto plazo; G01-Mercados financieros en general; G15- Mercados financieros internacionales
JEL codes
F32-Current Account Adjustment; Short-Term Capital Movements; G01-Financial Crises; G15-International Financial Markets
Keywords
Reservas internacionales óptimas, Paradas repentinas, Dolarización financiera
Keywords
Optimal International Reserves; Sudden Stops; Financial Dollarization
Identifiers
https://repositorioinvestigaciones.bccr.fi.cr/handle/20.500.12506/112